With the rising demand for higher education, the demand for education loans has also increased in recent years. However, choosing the best education loan in 2025 can be very confusing, with lenders offering varying loan terms to satisfy the diverse needs and requirements of students. And inflation makes it even more difficult to get the right education loan by affecting the total loan cost and repayments of the loan. 

In this article, we have covered how education loans are influenced by the inflation rate, along with factors to consider while choosing an education loan during inflation. We have also covered various tips to help you choose the best education loan during inflation.

How Inflation Influences Education Loans in 2025

Many students don’t know how inflation can affect their student loans in 2025. Inflation refers to the increase in the price of goods and services offered in a country over a period of time. It is one of the major factors affecting the total education loan cost and repayment cost of students.

Inflation affects education loans for both domestic and international studies. Students should understand the impact of inflation on education loans while planning to take a student loan to pursue their education. Here’s how inflation influences education loans in 2025:

Education Loan Costs and Inflation

Education loan costs cover the essential educational expenses, including the tuition fees, living expenses, purchase of study materials, purchase of a laptop, and other course-related equipment, and other miscellaneous expenses. However, the cost of education all over the world is steadily increasing due to inflation. This is how inflation increases the student loan requirement of students, ultimately increasing the total education loan costs, especially for abroad education loans. Let’s understand this with an example:

Example: 

Let’s assume that the average tuition fees of pursuing a master’s degree from a recognized college in the US were USD 10,000 in the last year. Now, if it has increased to USD 10,500 due to inflation. This means that students now have to pay USD 500 more compared to the students from the last year for the same course and college. This is how the education inflation rate can impact international students by increasing the tuition fees.

Affects the Total Repayment Cost

Inflation significantly affects student loan repayments, particularly for education loans with floating interest rates. As we have already discussed, inflation can increase the total education loan cost by increasing the loan requirement os students over time. Inflation can also lead to an increase in the interest rates on education loans. 

RBI can increase the interest rates on loans to manage inflation in the country, which can ultimately increase the EMIs of student loans. This is how inflation affects the total repayment cost of education loans and makes it difficult for students to repay the loans.

Factors to Consider While Choosing an Education Loan During Inflation

The following are the factors you should consider while choosing an education loan during inflation:

Education Loan Type

Education loan type is one of the significant factors you should understand before choosing an education loan during inflation. Education loans in India are divided into two major types, secured and unsecured education loans, depending on the collateral requirement of the loan. Understanding the student loan type can help you choose the best education loan in 2025, that can help manage your finances during high inflation.

  • Education loans that require applicants to pledge collateral as security for the loan amount are secured or collateral education loans.
  • Secured education loans are offered at low interest rates and can be flexible with eligibility criteria.
  • Unsecured education loans, on the other hand, are offered to students without requiring them to pledge any property as collateral security for the loan amount.
  • Non-collateral education loans have strict eligibility criteria as there is no collateral involved in the loan.

Interest Rates

Another major factor that students need to consider while choosing an education loan during inflation is the interest rate of the loan. There are two types of interest rates offered on student loans in India: floating and fixed interest rates. 

  • Floating interest rates on education loans are not constant and can change according to the repo rate and the lender.
  • Fixed interest rates, on the other hand, remain constant throughout the entire loan tenure.

Repayment Terms

You should also consider the repayment terms of the lender while taking an education loan during inflation. They refer to the moratorium period, the repayment tenure, and the EMIs of the loan. They directly influence how much you repay to your student loan. Understanding the repayment terms of education loans from different lenders can help you while choosing an education loan during inflation.

Lenders offering the Best Education loan in 2025

The best education loan is not the same for everyone, as each individual has a unique situation. Lenders offer various education loans to cater to the diverse needs and requirements of the students. You should choose the best education loan in 2025 for yourself based on various factors, including the loan limit, collateral requirement, interest rate, and repayment terms. The following are the lenders offering education loans in India:

Public Banks

Public banks in India, such as SBI and BOB, are known for their secured education loans. Secured education loans from public banks are offered with low interest rates and flexible eligibility criteria. An education loan of up to ₹3 crores can be availed through the public banks with collateral. Student loans from public banks cover a wide range of courses from many countries.

Private Banks and NBFCs

Private lenders such as private banks and NBFCs can offer education loans of up to ₹1.25 crores to study abroad without collateral. They are known for their higher loan amounts and strict eligibility criteria for education loans without collateral. These banks have a list of recognized universities, according to which they approve unsecured study abroad loans. Unsecured education loans from private lenders can fund both PG and UG programs.

International Lenders 

Apart from lenders in India, you can also get an unsecured study abroad loan from international lenders such as Prodigy and Mpower Finance. These lenders offer student loans in foreign currency, which means that students can avoid currency conversion charges. You can get an unsecured education loan from foreign lenders even without a co-applicant, as they provide loans based on the future earning potential of the students. 

Both public and private lenders offer study abroad loans. However, these lenders offer varying terms for education loans. Request a callback from us or comment down your queries to know which lender would be most suitable for you to take an education loan.

Education loan comparison during inflation

Comparing the education loan terms of different lenders can help students while choosing an education loan during inflation. Here is an education loan comparison from different lenders that can help you compare the terms of education loans from different lenders:

Loan Parameter  Public Banks

 Private Lenders(Private banks and NBFCs)

 Foreign Lenders
Loan Amount Up to ₹3 crores(Secured) Up to ₹1.25 crores(Unsecured) Up to USD 1,00,000
Interest Rate Starts from 8.15% Ranges from 10.5%  12% to 14%
Processing fee  ₹10,000 plus GST  1% to 2% of the loan amount  5% of the loan amount 
Repayment Tenure Up to 15 years  Up to 15 years   Up to 20 years 
Interest during the Moratorium Period  Simple interest (Optional) Partial or full simple interest  Full simple interest
Co-applicant requirement Yes  Yes  No 
Currency  INR INR USD

Tips to Choose the Right Education Loan During High Inflation

Choosing the right education loan can help you avoid paying more during the repayment period and manage your finances more efficiently during inflation. Here are a few tips you can use while choosing an education loan during inflation:

Monitor Education Inflation Trends

You should regularly monitor the inflation rates in the country while planning for an education loan to manage your finances more efficiently. Regularly tracking inflation trends and market conditions can help you during the repayment of the loan. You should also monitor the education inflation rate of foreign countries when planning for an education loan for studies abroad. This can help you plan your budget by understanding the cost of tuition fees, living expenses, and other education-related expenses in the country you are planning to go to.

Compare Lenders

Comparing the student loan terms from different lenders can help you choose the right education loan during high inflation. You should compare all the loan terms, including the loan amount, collateral requirement, interest rates, and repayment terms. Choose a lender that satisfies your needs and requirements.

Income-based Repayment Plans 

Many banks in India offer income-based repayment plans for education loans to reduce the impact of inflation on education loans. These repayment plans offer flexible monthly installments to students based on their income and family size. This helps students and their families by making repayments more manageable.

Loan Consolidation Programs

Loan consolidation refers to the process of combining multiple education loans into to single loan. Students with more than one education loan can opt for loan consolidation. By consolidating multiple education loans into one loan, lenders can offer a lower interest rate on the loan, reducing the financial stress of the students.

Fixed Interest Rates

Many banks offer fixed interest rates for student loans in India. Unlike floating interest rates, fixed interest rates remain constant for the entire loan repayment period. This significantly helps students avoid paying more interest to the education loan due to inflation.

Conclusion

Choosing the best education loan in 2025 can be quite challenging, with many lenders offering various options. Students should understand how to select the right education loan during inflation to avoid losing money. Therefore, this article provides information on lenders offering the best education loans, along with a comparison of their terms to help you choose. We have also included several tips to help you choose the right education loan during inflation to help you manage your finances.